Allowed

M/s Oasis Infrastructure Private Ltd. v. The State of Telangana

Telangana HC12 Oct 2022CRLP/7676/2018

Case brief

AI extract

What is this about?

The High Court allowed criminal petitions seeking quashment of proceedings under Sections 420 and 506 IPC. The court held that the dispute was purely civil in nature regarding recovery of commercial dues and the essential ingredients of criminal offences were absent.

What did the court decide?

Proceedings against petitioners in C.C.No.3318 of 2018 are quashed.

M/s Oasis Infrastructure Private Ltd. Vs… — Contract and Commercial Disputes | Telangana HC (2022)

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IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD

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WEDNESDAY, THE TWELFTH DAY OF OCTOBER TWO THOUSAND AND TWENTY TWO

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PRESENT

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THE HONOURABLE DR. JUSTICE D.NAGARJUN

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CRIMINAL PETITION NOs. 7676 and 11677 ot 2018

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cRtMtNAL PETtTtON NO. 7676/2018

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Between:

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M/s Oasis lnfrastructure Private Ltd, office at 119-12115 , Shreekant chambers, Near R.K. Studio, Sion - Trombay Road, Chembur ( East), Mumbai- 400 071 Rep. by its Accountant Sri Suhas Vasudeo Pendnekar, S/o Vasudev Pendnekar, aged about 54 years, Occ - Service, R/o Mumbai.

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Suhas Vasudev Pendnekar, S/o Vasudev Pendnekar, aged about 54 years,Occ: Accountant of Accused No.1 Company, Office at 119-12118 , Shreekant chambers, Near R.K. Studio, Sion - Trombay Road, Chembur ( East), Mumbai - 400 071 .

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... Petitioners/Accused 1 & 4

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AND

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1 The State of Telangana, Rep. by Public Prosecutor, High Court at Hyderabad.

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2 M/s Sangdha Erectors Private Limited, Rep. by its lrlanaging Director, Sri. S.s Sangh S/o Ajit Sangha, Aged 60^years, Office at Plot No.1-8, Vasavi Nagar, Picket, Secunderabad, Telangana State.

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...Respondents/Defacto Complainant

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Petition under Section 482 of Cr.P.C praying that in the circumstances stated in the Memorandum of Grounds of Criminal Petition, the High Court may be pleased to quash the proceedings against the Petitioners in C.C.No. 3318 of 2018 on the file of Xl Additional Chief Metropolitan lt4agistrate, Secunderabad.

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l.A. NO:^'l OF 2018

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Petition under Section 482 of Cr.P.C^praying that in the circumstances stated in the Memorandum of Grounds of Criminal Petition, the High Court may be pleased to stay all further proceedings including appearance of the^petitioners in C.C.No.3318 of 2018 on the file of Xl Additional Chief Metropolitan Magistrate, Secunderabad.

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cRtMtNAL PET TION NO.^'11677/2018

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Between:

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Sri Prerr rl Naresh Thakar, Occ - Working as Dire,cto' of M/s Oasis Infrastruc ure Pvt Ltd, Aged 61 Yrs, Fi/o. Flat No. 202-1,, Gcvardhan Dham, Plot No. 121 Garodia Nagar Ghatkopar (East), Mumbai -^,100077.

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Smt Dars rara Premal Thakar, W/o Sri Premal Naresl I'irakzrr, Occ - Working as Direct( r of M/s Oasis lnfrastructure Pvt Ltd Rro. Flat N,r. 214-A, Govardhan Dham, Pl rt No. 121 Garodia Nagar Ghatkopar (East), l\4u rbai - 4OO077.

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...Petilic,ner;/Accused 2 & 3

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AND

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State of 1 elangana, through lt's Public Prosecutor Hi_oh C:urt, Hyderabad

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l,4/s Sang ra Erectors Pvt Ltd, With its office at Plot No. 1- 3, 'asavi Nagar Picket, Sr cunderabad. Rep by its Managing Director Sri S.S Sangha

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...Resporrderrts/Complainant

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Petitaon rnder Section 482 of Cr.P.C praying that ir th3 circumstances stated in the M lmorandum of Grounds of Criminal Petltion the High Court may be pleased to qlrash the proceedings against Petitto ner'A,;cused in C.C. No. 3318 of 2018 rn the file of Hon'ble XI Addl. Chief Metrrpolitan N,4agistrate at Secunderabad rnder Sec. 420, 426, 477-A.,382 and 506 cf IPO as one with an intent io abuse :rocess of law.

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l.A. NO: 1 OF 2 )18

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Petitlon lnder Section 482 of Cr.P.C praying that ir the circumstances stated in the M:nrorandum of Grounds of Criminal Petitio t, the High Court may be pleased to itay all further proceedings in C-C No. 331t:/2018 on the file of Hon ble XI Add Chief Metropolitan Magistrate at Secunde-abad under Sec. 420, 426, 477-A'.38 I and 506 l.P.C pending disposal of the crinrinal petition.

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Thrs Pet tion coming on for hearing, upon perusin(l lhe Memorandum of Grounds of C.inrinal Petition and upon hearing the argunrents of Sri D. MADHAVA Rl O Advocate for the Petitioners and of 1l'e r\dditional Public Prosecutor (TC ) on behalf of the Respondent No.'l and or liri THU[/U CHANDRA SHEKHAR, Ad^,ocate for the Respondent No. 2 in both pet ti,:rns.

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The Courl mac e lhe following: COMMON ORDER

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THE HON'BLE DR. JUSTICE D.NAGAR'UN

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CRIMINAL PETITION Nos.7676 and, Lt677 of 2018

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COMMON ORDER:

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These petitions are filed seeking quashment of C.C.No.3318 of 2018 on the file of learned XI Additional Chief Metropolitan Magistrate, Secunderabad, cognizance of which was taken against the petitioners/A1 to A4 for the offence under Sections 42O and 506 IPC.

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The facts in brief as per the private complaint fi1ed by respondent No.2/de-facto complainant are as under:

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a. The de-facto complainant is doing business in Engineers and Contractors having its registered office at Secunderabad. As per the quotations dated 27.12.2011, the petitioner/A1 company issued work orders dated 12.01.2012 and 12.04.2072 for supply of crawler crane No. DEMAG CC 60O with a capacity of 150 MT for erection works for structural steel works at 6x660 MW Sasan ultra Mega Power Project at Sasan, Madhya Pradesh site on monthly hiring charges of Rs.7 lakhs. A1 company^was also asked to supply one crawler crane Lorain L 79O^having capacity of 19 MT for their KVK Nilchal Power Project at^Orissa on monthly hiring charges of Rs.3,50,0OO/-. A1 company^failed to make satisfactory services to the de-facto^complainant

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company al d also stopped working from Septer-rber, 2012 without inli rrrning the de-facto complainant, whicl-r is in violation of :ltruse 7 of the work order. A 1 corrLlt,rnl started demanding I'ayment of money by way of selding t:-rnails to the de-facto cor rplainant company. The de-facto complainant company ha; issued notice dated 08.11.2012 and '.>.2.O2.2O13 to A 1 compan r' to withdraw its illegal acts. Thc de-facto complainant c()mpany has also gave reply to all tht: r::-mails sent by A i comp any stating that the work at KNPCL ra'as stopped due to Gove^-nment order vide W.P.No.9384 of 201'.), before the High Court of Orissa at Cuttack. Even though the de-facto complainanl \r'as not liable to pay any amount to A1 company, A1 compan5 liled a civil suit against the de-facto complainant company o r the file of Bombay City Civil Court vide S.C. No.4475 of 2Ol3 for recovery of an amount of Rs.53,96,26 )/- on 26.17.2013 and the same wa,i decreed exparte on 06 05.2016. The de-facto complainant ccmpany has also filed a r application under Order IX Rule 13, read with Section 151 C.P.C., for setting aside the ex-parte decree dated 06.05.2016 and the same is still pending. The de-facto complainanl company has also preferred an apperll against the decree and : udgment dated 06.05.2016 in S.C.No.4tl75 ol 2073 before the I[igh Court of Bombay vide RCA.No.3974 of 2Ol7V

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which is also still pending. A1 company has filed a company pe tition before the High Court of Andhra Pradesh vide Company Petition No.253 of 2015 with false and baseless allegations suppressing filing of civil suit.

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b. Al company has also filed E.P. before the I Additional Chief Judge, City Civil Court at Secunderabad vide E.P.No. 160 of 2Ol7 for attachment and sale of the property of the de-facto complainant's Director. The de-facto complainant company filed a counter in the said E.P.

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c. Whiie all these matters are pending in various Courts, A1 company has issued e-mail to the Principle Contractor i.e., KVK Nilchal Power Project stating that Crane Lorain L 79O is at the working site and required to be moved for that place. A reply has been given by the Principle Contractor stating that on account of the stay orders granted by the High Court, there^was no option except to move t}le crane from the premises. On 29.11.2OL7, the Principle Contractor issued e-maii to^A1 company stating that the crane was left at the site^{lor more than} five years without doing any work on account of stay^orders of the High Court and claimed Rs.1,O2,13,888/- for safeguarding the crane during these Iive years. A1 company on 26.12.2017

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issued a le tter to the de-facto complainant coml)a ny to release the crane.

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d. A1 c,,mp2ny has claimed false amount from the de-facto complainar t company '"vilhout doing any work arrd filed false cases again st the de-facto complainant company trctbre. the High Court and other Courts, damaged the reputation and caused wrongful lc ss. A4 being the representation ol 1\l company visited the le-facto compiainant office and threat:ned with dire consequenc -'s to settle the accounts with the insti 3ation of A2 and A.3, wl io are involved in the day to day a,:tivities of A1 company ar d therefore sought for taking cognizance against the petitioners or the offence undcr Sections 4'2O,4'.1,6, 477A, 382 and 506 iP( .

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On c rnsideration ol the said complaint, ,he learned Magistrate ras passed orders on 09.05.2018. u.h ch read as under:

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'Hcard ald perused the record. The sw-om statem:nt of the complainant is recorded as P!/... The main r ispute pertains to cheating t1.e PW. 1's company causin 1 wrongful loss and threatening him rvilh dire conseqlences. As seen from the sworn statr:n1enl. of PW. I ,mcl the material on record, there are ,tuf{icr.ent grounc s for proceeding further against A1 to A4 consid,.ring the material available. Hence, case is taken on file against A1 to A4 for the offence under Sr:ctions 42O 'alll 506 of IPC only. Issue summons on payr:rent of procesr and call oo 25.07 .2078."

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Aggrieved by the taking of cognizance against the petitioners/Al to A4 for the offence under Sections 420 and 506 IPC, these petition are filed seeking quashmnet of the same on the following grounds:

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A1 company is doing business in supply of crane to various parts of India on hiring basis, A1 company has agreed to supply two cranes to the de-facto complainant company on monthly rent for a sum of Rs.7 lakhs and Rs.3,50,OOO/- each, A1 company has provided satisfactory services to the de-facto complainant company on both the work sites and bills were also raised in respect of the outstanding dues and payment of service tax and other Government dues to be paid by the defacto complainant and that as no money was paid, demand was made by e-mails from time to time. A1 company has sent notice d-ated 12.08.2012 to the de-facto complainant company to clear the entire outstanding amount of Rs.53,96,269/-. A meeting was held on 25.09.2012 between A1 company and the de-facto complainant company representatives. The de-facto complainant has admitted that they will inform A1 company, which has replied all e-mails and cleared all the dues of the defacto complainant company. The de-facto complainant company has failed to^{make payment} of Rs.53,96,2691-^as agreed. The de-facto^complainant com_pany has committed

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breech of⁽ ontract and lailed to pay total olltstanCing amount of Rs.66,45,2+7 l- including interest. In a civil suil in S.C.No.4475 of 2013 fik d by A1 company, lhe de-facto complainant company has filed vritten statement. A 1 company has also intimated immediatel ,r by way of notice that City Civil Court, Bombay has also passer I decree against the de-facto corrrplai:rzrnt company. The transa, :tion between the parties is a commerc irrl transaction and therefc re, the allegation that the petitioners have committed offence unr er Sections 42O and 506 IPC cannot be considered and therefo:e, prayed the Court to quash the case.

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Hearr. both sides and perused the recc,rd

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7 . Now, the point for determination is^q'hether the proceedings against the petitioners/A1 to A,1 in Cl.O.No.3318 of 2018 can br quashed?

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There is no dispute that thd de-facto r:omplainant company hr.s called for quotations ot 27.12.2O1L and also on 11.04.2012 for supply of two crawler cranes and beLsing on the response of A1 company, the quotation was acceplerl by the defacto compl nant company for which A 1 comptLny agreed to supply the < ranes of the specihc standards for a nronthly hiring charges of R s.7 lakhs and Rs.3,5O,O0O/- respectivt:1v.. Bottr the

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cranes were shifted to the work sites, one in Madhya Pradesh and another one in Orissa.

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9 . According to the de-facto complainant company, A 1 company stopped the work at the respective work sites and also the services were not satisfactory. It is also mentioned that on account of the stay orders granted by the High Court of Orrissa at Cuttack in W.P.No.9384 of 2012, the work at Orissa site was also stopped. Thereby, according to the de-facto complainant, the work was stalled and Al company, without any intimation, has stopped the work.

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On the contrary, the case of A1 company is that the work of A1 company <sup>.as never to the dissatisfaction of the de-facto complainant company and there is no communication from the de-facto complainant company that the work of A1 company at both the sites is not satisfactory aqd as per the agreement between the parties, the bill was raised for Rs.53,96,269 /- and later by adding interest @ 24% per annum as per the agreed clause, an amount of Rs.66,45,247 l- was raised. Al company has raised the bills and also sent many reminders and clariiied all the dues belonging to the de-facto complainant company and in spite of it, the de-facto complainant company has failed to respond and pay the outstanding bilis to be paid to AI company

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even as per hL' agreed terms. Ultimately, AI comgra:ry :ras filed a civil suit ir S.C.No.4475 of 2013 and the same w.ls de,:reed.

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As ser n from the record, the transaction^'l.retlveen A1 company ar d the de-facto complainant compan]. is purely commercial n nature. It is the de-facto complainant company, which has i rvited the quotations from various cornptrnies for supply of c:anes. Accordingly, A1 cornparny has, given the quotation : nd the same was accepted by the de-facto complainant company and the terms urere settl: d and the cranes were supplied.

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Admit -edly, the cranes of A1 company lras workerl at both the sites for some time. Later, both the cranos stouped working. According t, r the de-facto complainant compan],, 1.1 ce6p3ny stopped wor king voluntarily without there be ing a]J, intimat'on. Even accord ing to the de-facto complai4ant^(:ompan'l, in respect of the crane installed at Orissa company site, there are interim directions f om the High Court of Orissa in w.P.No.9384 of 2012. The. efore, whether the agreement betwer:n the parties stipulates tr ayment of money even if the work^..s stopped on account of z ny circumstances beyond the control^,)f the de-facto complainan - company and whether in case if the rrvork was not extracted al the work site by the Principle Contrac :or, whether

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still the de-facto complainant company is required to pay the rent to A 1 company, whether interest can be levied, are the issues, which are to be settled as per the terms of the contract.

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In fact, on careful perusal of the contents of the complaint and also the material placed before the Court by A1 company, though the de-facto complainant company extracted the work at least for some time, no payment was made in favour of Al company. It is not the case where from the beginning only the cranes of A1 company never deployed at the working site and the cranes were never worked at the respective sites. Admittedly, for some time, the services of the cranes were extracted by the de-facto complainant company. Therefore, leaving aside the issue u,hether the de-facto complainant company required to pay the rent for tie period when the cranes were not doing service at the respective work sites, the de-facto complainant company is bounil to pay the money for the work extracted. Therefore, the issue between the parties is purely commercial in nature in respect of recovery of money.

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t4. Al company has fi1ed a suit in S.C.No.4475 of 2013 and the same was decreed. It is submitted by the de-facto complainant company that the said suit was decreed ex-parte, 1^{but as per the contentionof A1 compa35r, the de-facto} )

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complainanl company has filed written statelnent. rrn d thereafter the suit was decreed.

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Accor, ling to the de-facto complainant, they have preferred ar appeal and the same is pending. S rr:ila:'ly, some other litigat cn in respect of the same dispute is a so pr:nding in other Court s. Therefore, when the matter has a lrezLdy been settled in tl Le civil Court at Bombay, ali the isstrr:s, rvhich A1 company ha s been raising here are the subject matlr:r before the civil Court.

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In Vi ay Kumar Ghai and others vs. 'llhe istate of West Beng al and othersr the Hon'ble St,pre'r r: Ccr-rrt held

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at paragral^,hs 31 to 36 as under:

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J1. Section 4'15 IPC deflnes 'cheating" ivhich rcads as under

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"415, Cheating.-Whoever, by deceir ing rn'/ pel'son, fra tdulently or dishonestly induces the p(->rs()n s.() dec,:ived to⁽ eliver any property to any person, or to conse tt tha-, any per;or shall retain any property, or intenti()na l;, induces the person so deceived to do or omit to dc an\t'rirrg $'hich he would not do or omit if he were not so dc<ei,,ed, and wh ch act or omission causes or is likely to cause darnage or harm to that person in body, mind, reput ltion or prc perw, is said to "cheat'."

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The es .ential ingredients of the offence of chea ting rrr e

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Deception of any person

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or 2. (a) Fraudulently dishonestl] indr.oi 1g that PeI^SOn-

r l2o22l 7 sc( 124

(rJ to deliver any property to any person; or

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(r4 to consent that any person shall retain any property; or

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(b) intentionaliy inducing that person to do or omit to do anything which he would not do or omit if he were no so deceived, and which act or omission causes or is likely to cause damage or harm to that person in body, mind, reputation or property.

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A fraudulent or dishonest inducement is an essential ingredient of the offence. A person who dishonestly induces another person to deliver any property is liable for the offence of cheating.

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Section 420 IPC defines "cheating and dishonestly inducing delivery of property" rvhich rcads as under:

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"42O.^{Cheating dnd dishonestlg inducingdeliuery oJ} ptopertg.-Whoever cheats and thereby dishonestly induces the person deceived to deliver any property to any person, or to make, alter or destroy the lvhole or any part of a valuable security, or anything which is signed or sealed, and which is capable of bcing converted into a valuable security, shall be punished with imprisonment of eitirer description for a term which may extcnd to seven years, and shall also be liable to fine."

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Section 420 IPC is a serious form oI cheating that includes inducement (to lead or move someone to happen) in terms of delivery of property as rvell as valuable securities. This section is also applicable to matters \'here the destruction of the property is caused by the way of cheating or inducement. Punishment for cheating is provided under this section which may extend to 7 years and also makes the person liable to fine.

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To establish the offence of cheating in inducing the delivery of property, the following ingrcdients need to be proved:

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(4 The representation made by the person was false.

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(n) The accused had prior knowledge that the representation he made was false.

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(iirl The accused made false representation with dishonest intention in order to deceive the person to whom it was made.

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(ir) The act where the accused inducetl^t-Le ;)erson to deliver the property or to per'Ic,rm or to ab.tain from any act which the pe-s{ n \rould ha'e not done or had otherwise c)n.lmitted.

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As observed and held by this Court ir R.K. Vijaya;arathy v. Sudha Seetltat am lR.K. Vijaya;arathg v. Sudtut Seetharam, (2019) 16 SCC 731) : (!1020) 2 SCC (Cri) 4541 , the ingredients to constitute an offerrce LLnder Sectior 420 are as follows:

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(r) a person must commit the offence of che?tirrg L.nder Section 415; and

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(it't the person cheated must be dishone sth, in lrrced tcr

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(a) deliver property to any person; cr

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(b) make, alter or destroy valuable sec urity or anything signed or sealed and orpable r f trcing converted into valuable security. Thus, <heaLlirrg is an essential ingredient for an act to constitute ar oflcnce under Section 42O IPC."

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In ort er to fasten the liability on Al conrpanl' for the offence un( er Sectiol 42O IPC, the de-facto oorrrplainant company is :xpected to allege and file materlal be b|e the Court to show tha - A1 company with an intention to d,:c,:ivr: the delacto comple inant company from the inception har; induced and got the wo 'k stopped and committed loss to t re de-facto complainant company.

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In fac ., on going through the respective cor-tentions of both the pa; ties, it is clear that it is the de-facto complainant company, w 1rich has invited the quotations, extrircted some work and no - paid the money even for the undisprrtt:d period of service. A1 company has not voluntarily approaclLed the de-

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facto complainant company. If at all any loss is sustained, it is not to the de-facto complainant company, but to A1 company itself because both the cranes are installed in the respective sites as required by the de-facto complainant company and no money was paid for the services and it is also mentioned that A1 company was also asked to pay more than one crore for keeping the cranes safely at the working site. Therefore, considering all the above, none of the ingredients of Section 42O IPC are attracted to the case on hand.

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i8. In order to fasten the liability under Section 506 IPC, the de-facto complainant company is expected to allege and prove that the accused have intimidated the de-facto complainant comp€rny criminally, threatened them with dire consequences and on account of such threatens, the de-facto complainant company has committed or omitted to do anything which in normal course they would not have done so. Except making a bald statement, in a generic sense, that A4 as a representative of A1 company visited the de-facto complainant company oflice and threatened with dire consequences to settle the amount with the instigation of A2 and A3, nothing has been mentioned. On which date A4 has come and in whose presence, he has threatened the de-facto complainant, what are the utterances he

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has made, nothing is mentioned and it has also rrot nentioncd as to the consequences of such utterances $,hat Ir,: has done

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Ther:fore, considering the circumst.ance:;, the de-facto complainar rt company has also failed to convince the Court that there are ngredients for fastening the liabilit-v undt:r Section 506 I PC ag rinst the petitioners.

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ln or ler to consider a case under Section 48il CI.P.C., the petitioners are expected to prove that even if thr:, contents of complaint^, tre accepted to be true, there shouid n,rt have been any case ag ainst them for the offences allege:d.

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In tl e case on hand, as discussed abcve, even the contents ol the private complaint are accepted to be true, no offence is nade out against the petitioners to b(] considered under Secti :n 4a2 Cr.P.C.

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This s also a clear case where the <lispute belween the parties is p rrely civil in nature i.e., recovery of money. The defacto compl rinant company having failed in differerLt forums, in order to arr r twist the petilioners has invoked the jr,rrisdiction of criminal Co rrt without there being any basis.

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In vie r of the above, the petitioners have mlcle out a case that continr tation of proceedings against them woull amount p

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abuse of process of law. Therefore, it is a Ilt case where the proceedings against the petitioners in C.C.No.3318 of 2018 can be quashed.

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In the result, both the criminal petitions are allowed and the proceedings against the petitioners in C.C.No.3318 of 2018 on the file of the X Additional Chief Metropolitan Magistrate, Secunderabad, are hereby quashed.

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Miscellaneous applications, if any, shall stand closed.

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sdl NAYANI^{CHANDRA SEKHAR 849} ASSISTANT^RFFISTRAR /ITRUE COPY//

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SECTION{bFF|CER

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To,

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